Overrun Justification Memorandum Guidelines

Accurate estimating is essential in determining the validity
of bids. The following are the latest guidelines for overrun/underrun
justification memorandums for federal aid and state-funded construction
projects.

Letting overrun/underrun justification memorandums are required
for all types of projects where the apparent low bid is 20% or more
over or under the engineer’s estimate and there are two or more
bidders, regardless of project cost. Projects with only one bidder
require justification when the apparent low bid varies from the
engineer’s estimate by more than +/-10%. These memorandums are prepared
by the district and submitted to CST/Letting for further handling
and coordination with the letting management office of the Finance
Division. This office submits all memorandums to the Construction
Division director for ultimate approval of the recommended bid award
or rejection by the Texas Transportation Commission.

For more information, refer to the Project Development
Process Manual, Task 6210.

Once these points
have been considered, the Construction Division recommends award
or rejection of the bid overruns/underruns to be acted on by the
Texas Transportation Commission during the same month’s scheduled
Commission meeting.

For more information, refer to the Project
Development Process Manual, Task 6200.

Local Participation

As noted in the Additional Payments
subsection in Section 4, the district personnel that coordinated
the funding agreements with the local entity should update this
information. The Contract Services Office (CSO) and the Construction
Division uses this information when issuing the construction work
order.

Projects with outside funds are
conditionally awarded, and contracts are released only after all terms
as outlined in the project’s Advance Funding Agreement (AFA) have
been met. The responsibility for the financial clearance function
has been delegated to the District Engineer (DE). The Notice of
Financial Clearance for Bid Opening and Award form signed by the
DE needs to be sent to CSO once 30 days prior to bid opening and
once prior to award. If a project overruns after letting, the district
needs to discuss the bid prices with the local entity or Metropolitan
Planning Organization (MPO) participating in the funding of the
project and insure that the outside entity concurs with the acceptance
of the higher costs. If they do not concur, the contract is not
to be recommended to the Commission for award.